Latest in a series of scams linked to cryptocurrencies, is the U.S. Commodity Futures Trading Commission filing charges in a federal court against a Nevada-based firm and two persons associated with it for misappropriating $6 million by running a ponzi scheme. The scheme was disguised as a solicitation for buying a virtual currency called My Big Coin, or MBC.
The CFTC charged My Big Coin Pay, Inc. and two individuals Randall Crater and Mark Gillespie for misappropriating customer funds. The coin's name was similar to a popular virtual currency.
The agency alleged that the accused misappropriated the funds collected from customers by transferring them into personal bank accounts, and using those funds for personal expenses and the purchase of luxury goods, a home, jewelry, furniture and so on.
The case was filed under seal in the U.S. District Court for the District of Massachusetts on January 16. Consequently, a judge issued a restraining order freezing defendants' assets. The scam ran from at least January 2014 through January 2018. The defendants claimed that the MBC was backed by gold.
Further, they claimed that it was traded on cryptocurrency exchanges and presented daily trading prices, when no price existed as MBC was not trading. Another false claim was that MBC had partnered with MasterCard and can be used anywhere where the latter was accepted.
"In reality, as alleged, the supposed trading results were illusory, and any payouts to customers were derived from funds fraudulently obtained from other customers in the manner of a Ponzi scheme," the CFTC said. CFTC's Director of Enforcement James McDonald said the agency is actively policing the virtual currency markets and will vigorously enforce the anti-fraud provisions of the Commodity Exchange Act.
"We caution potential virtual currency customers, once again, that they should engage in appropriate diligence before purchasing virtual currencies," McDonald added.
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